Management Control System (MCS)

Management Control System (MCS)

The Management Control System (MCS) is a set of tools used to steer an organisation towards its strategic objectives and the achievement of competitive advantage. It encompasses a range of methods for setting performance expectations, outlining operational standards, monitoring implementation, analysing gaps, measuring results, and improving future performance.

MCS plays an important role in an organisation’s success in today’s highly competitive business environment characterised by uncertainty and continuous innovation. MCS can influence the behaviour of an organisation’s resources in the implementation of its strategies.

Achieving operational excellence through MCS

Research suggests that the adoption of management control instruments such as MCS can significantly improve responses to current challenges, leading to greater success in business transformation. For example, a 2021 study highlighted how companies with an MCS in place demonstrated improved capabilities in managing the unprecedented challenges posed by the COVID-19 pandemic.

The improvement can be attributed to the valuable insight provided by the MCS, which gives managers information on the performance of different business processes and departments.

Meanwhile, a study published in the 2022 Review of Managerial Science highlighted the positive impact of implementing an MCS on a company’s market value, when the organisation had high boundary levels. This finding is partly due to the MCS’s ability to provide comprehensive data to investors, increasing their confidence in the company’s performance.

Organisations can also leverage the MCS in different ways to drive strategic renewal and initiate transformational change within the organization, but also to align with broader societal sustainability objectives. Overall, an MCS can be the key to achieving operational excellence.

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